Acting PM Winston Peters says enabling young couples to buy houses for the equivalent of 5x their income is the Govt’s long-term objective, but it won’t happen during its first term

Acting PM Winston Peters says enabling young couples to buy houses for the equivalent of 5x their income is the Govt’s long-term objective, but it won’t happen during its first term

Acting Prime Minister Winston Peters wants to see house prices no higher than five times income for young home buyers, but won’t say if he wants house prices to fall.

The most recent data shows the median house is valued at just over six times household income as an average across the whole country.

But that number rockets to more than nine times income when looking at Auckland alone.  

Speaking at his weekly post-cabinet press conference, Peters said he looked forward to the day when a young couple can “prospect no higher than five times their annual income.”

This is the Government’s “long-term objective,” he says.

He does not expect this to happen in this Government’s first term, and not necessarily its second term either.

“But we will get there with these policies,” he says.

The Government has several policies which it says will increase the supply of houses in New Zealand, as well as raise incomes.

These include its plan to build 100,000 KiwiBuild homes in 10 years, as well as banning foreign buyers from the housing market.

The Government is also increasing the minimum wage to $20 an hour by 2020.

“It is our long-term objective to ensure first home buyers can obtain their first home that is [in] a way which is affordable without the desperation which I’m seeing today.”

He says many couples are paying 65% of their weekly wage just to secure the mortgage, rates and insurance.

“If you ask me, do I want to see us dramatically improve that? Yes, I do.”

He would not say whether he wants house prices to fall – “I’m not that naïve,” he told reporters.

But he says under this Government, wages are going to increase “significantly.”

As well as increasing wages, it’s the Government’s job to make sure business’ profits increase as well.

“We understand that we can improve business outcomes, that are better able to handle better wage outcomes for their workers and we will all be better off.”

In its most recent Financial Stability report, the Reserve Bank says over the past year, credit growth has declined and house price inflation has stabilised.

“This is in part due to banks tightening mortgage lending standards, which has led to a reduction in the share of new mortgage lending at high debt-to-income ratios and on interest-only terms.”

The report says these are “positive developments for reducing financial system risk.”

The second phase of the Reserve Bank Act review is currently underway and part of that will address whether the Central Bank needs to add debt-to-income (DTI) restrictions to its macro-prudential toolkit.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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he needs to allow the RBNZ to use DTI,


It also wouldn't hurt to whip on the immigration handbrake, while you are in the drivers seat Winnie.

Winston out to the races again
Look at the latest ASB study Winston
Foreign buyers of Kiwi homes at alarming levels today
Deal with it Winston


Yep. DTi with a requirement for immediate effect and a massive reduction in immigration or he is dreaming.

Drop interest rates to 0% and cut net immigration to 0. Sure to boost wages.

But he says under this Government, wages are going to increase “significantly.”
I say this increase in wages is not going to happen willingly, that's why so many employee groups are planning to strike. For a government that got in on a promise of raising people wages there is an increasing likelihood this will be a one-term government.

There are far more wage earners than employers.


You have a habit of misreading comments, you know that right?

The point was this government got elected because their voters wanted better wages but they will probably not see a significant change in the short term hence all that strikes (including government departments). This means come next election there will be a lot of disillusion voters.

There are many many reasons why voters vote.

You realised you did it again right? I don't care, never did, I was just trying to explain why you're original reply didn't make any sense.

I am really excited with what your going to come back with though =) could be anything based on your trend.

It's "realise" not "realised" and then "Your" not "You're" and then "You're" not "Your", you know that right?

Do your realise how much I could care less?


Unless the strikes work.

I'm not the one that made the point and I don't care.

Reply to the original chain, this is a troll chain now.

Note: if your comment was meant to troll me then well play sir, please carry on.

"Played" not "play"

its just you're opinion.



"its just you're opinion". NO. What you meant to write was it's just your opinion. How can you formulate an argument,if you can't master basic English?

What you taking about?! I do English real good

That will not switch them back to National as they know they haven't a snowball's chance in hell there, as the entire term of the National govt proved to them, this situation will not have arisen if National hadn't kept the foot on the wages throat while at the same time allowing housing costs to balloon to completely out of reach for so many.

Seriously what is wrong with you people, hit reply on Robert Meeks comment not mine. It was never my opinion I was just laying into Didge because they can't read properly.

Also if you could add some bad grammar and spelling mistakes, because it seems to wind up Fluid36, that would be awesome thanks.


Okay, so that's the objective. All of a sudden there is a big incentive for first home buyers to do nothing, no need to buy now and rush in and pay 8 - 10 times income. After all the government policy is to try and reduce it to 5 times. What happens? Pool of buyers disappears overnight and the market brings prices down to 5 times income far more quickly than Winston imagined, add in a little help from an Australian bank 'credit crunch' along the way and this will get interesting. I reckon we should get some strong opposition to this on our little forum today. 'Equity, what equity, where did it go, negative, what I can only get the standard variable rate? You want security over my house too? You want me to pay back capital? Huh, no tax break against income?'

Good old Winnie, taking control of the situation whilst Jacinda is busy.

As the prices start to fall and household spending is reigned in, businesses and government will look to areas where savings can be made.. generally that means staffing costs.. Middle managers, contractors who are expensive are often the first to go in the early rounds of blood-letting, let's just hope that not too many of them are negatively geared or we'll be down to 3 X multiples of income before the next decade starts. Hey ho, paid mine off!

Yeah that's probably not going to happen.

Don't get me wrong, I'd love affordability to improve. I am 100% on that band wagon. But its Winston, who knows what he'll say tomorrow.

Typical Winston and this COL, say things and absolutely no detail on anything.
Wages go up so what happens to the prices of everything?
They go up,so how on earth is anyone better off financially.
Building costs will go up, rents will go up!
Very easy to say things this lot, but they never follow thru with anything!
Winston says 5x income for a young couple, won’t happen this term or next term, which is blatantly obvious as there ain’t going to be a second term for this COL
Winston won’t be around anyway, so pretty safe for him to say that.
How is the Pike River 26million farce going does anyone know????


Nice to see you supporting the coalition and urging more action, lets hope they heed your advice.

Lets hope CPI goes up so interest rates go up. Should sort out the property bubble in no time.

Yes brick I think your right on that one.the only way prices will go down is if interest rates go up.

Prices depend on - Supply/Demand/Availability of money and its the last item is usually the brick that tips the balance either way. Banks are already tightening criteria which will get tougher as Banks increasingly refuse to lend to each other.

"lend to each other"

Can you elaborate on that? I don't disagree with the overall comment just confused about bank lending money to other banks.

Have you not heard of the interbank rate?

Yes, but "banks not wanting to lend to other banks" didn't explain very much, I asked them to elaborate.

Specifically I was curious what drivers they thought were causing this.

In an age where money is created out of nothing, who needs detail. What everybody believes is all a lie anyway, this one is as good as the next. Sentiment is the driver, not the details.

Scarfie, with loose money and then QE prices have gone to 10x salary, if the SHTF and the world turns deflationary no one should make predictions where it would stop..... no many ever predicted Auckland would get to 10 x salary

Wages go up so what happens to the prices of everything?
They go up,so how on earth is anyone better off financially.
Building costs will go up, rents will go up!

Not sure what you're trying to express here. Are you saying that because of inflation that nobody can be financially better off? How does that relate to house prices being 5x h'hold income? Are you saying that the massive property bubble has occurred because of h'hold income growth?

i thought you were describing the last government there,
only difference was 26 mil spent on a flag.instead of pike river

in that i agree with yout hey need to get on a do something and not just talk about it or they have a real danger of becoming the same as the last government.

i always wonder how much of doing nothing but talk is driven by roadblocks put up by the public service to make sure they have jobs in the future

Coalition of Liars was the last lot now residing on the opposition benches

On Pike River, perhaps go to Sonia Rockhouse's or Stand with Pike fb page for the horses mouth info.

Oxygen stealer, why would we listen to a word he has to say? He's a proven liar.

The fear I have is if the govt thinks that to reach this goal, they need to intervene, because there is a market failure. I think it is mostly the opposite, i.e. the mess we are in is due to too much intervention, and we need to remove intervention in order to sort it out.
While I agree with a reasonable minimum wage, I can't see how raising it to $20 has anything to do with helping people buy a house at 5x the median income.

" I can't see how raising it to $20 has anything to do with helping people buy a house at 5x the median income."

The reason you can't see the connection is because you probably have a reasonable understanding of economics. Or put another way, there is but the slightest connection highlighted by huge amounts of political spin.

I can see how raising incomes will help people buy houses. I'm not sure how you cant!

It brings me great joy knowing that you may never understand why you are wrong.

Next time I get a pay rise I'll remember to feel poorer then...

You're on minimum wage?

Luckily no. But I'm picking when the minimum wage goes up to $20, the guy already on $20 will then demand $25, and the guy on $25 will demand $30, etc.

So your hoping that an across the board wage increase of something between 15-20% is likely?

Do you have any expectation as to what that might to do the price of assets like houses?

I'm not necessarily hoping for anything, but I doubt a semi skilled worker would accept being on a similar wage to a burger flipper. A big raise in minimum wage has to cause some income inflation across the range.

I think it is fairly obvious that house and asset prices have become decoupled from income and are instead set by speculation - hence the need for Winston's objective.

Not to mention business confidence is already suffering. Raising the minimum wage won't help in correcting that...

I'm of the same thinking B-Rocker, how many people seem to realise your point though? It's kind of like the saying "Left wingers fear big business, right wingers fear big government," unfortunately there's a lot of people who believe intervention is the cure not the disease. I think freemarkets and liberalism need a PR campaign to remind everyone of the benefits.

Neo Liberal economics, the biggest sh*t spin in history.

Trickle down economics, where the burden trickles down and the money trickles up.

Please don't confuse the results of our money creation system with Liberal economics. Correlation vs causation.

What he is saying is correct albeit a bit fanciful. But all the factors now lining up for the mother of all corrections which is well underway in Sydney.

Statements like WP makes are just hot air, there is know plan or detail he is appealing to the same demographic that Trump does, feed them some hope and deliever nothing. Houses are expensive but why compare NZ average prices with the average household income and then not use the average Auckland household income to compare average Auckland prices ? Prices in Sydney and Melborne are falling but if you look at the detail it is the apartment market not the house market that is falling from over building.

Details are aways missing like the foreign buyers having 3% of the market, this includes Australians ( who will still have open access ) that make up 40% of that 3% BUT the real kicker is the the foreign sellers make up 1.8% of the market so the net influence is 1.2% not 3% ! So of the 1.2% Australians and Singaporians make up 0.5% so the Foreigns ban effects 0.7% of the market not of significance. What is of significance is annoying foreign investors whom we rely on to fund most of the large scale building projects hence why this legislation regarding foreign buyers is a hornets nest. The Col seem to be slow on understanding the unintented consequences of poorly thought out policies that could easily make the situation more difficult.

I am SOOO looking forward to the ban of foreign buyers' bill to pass .... Can't wait really !!

It will prove to everyone that this LOT ( spearheaded by DP and PT ) are shallow thinkers and dreamers pursuing personal glory experimenting muscle power instead of wisdom and logic .. A stupid net of unrealistic promises designed by idiot and desperate election campaign advisors which will cost the whole country dearly.

It will prove & result to nothing ... we will see house prices rise again in few months .... we will hear loud calls to Wait another year so we can see the effect of the bill and so on ... we will hear loads of BS and hear about anything else to distract the public from this failed topic.

The CoL term in office is the circus of melodrama ... each show is sillier than the previous one.

Reality is conversation in Sydney has moved on from "is there a correction?" to "how much will it decline?"

And Vancouver.

That is the definition of A Pipe Dream.

Ban on foreign buyer if not diluted and introduced soon, should help along with other measures.

Have noticed that anyone who has bought the house in 2016 or after (Some even in 2015) and are trying to sell now are finding it hard to sell without taking a hit (May be have some exception)

A house in sunnyhills purchased in 2015 for 850000 was sold recently after struggling for few months for 810000 and if one reduce agents commision defenitely a loss of 10% on face value.

Another cross leased house purchased in 2016 in Greenhill Crescent in pakuranga has come to the market (expectation at that time was mid 800 to 900 but it went for mid 900s). Would be interesting to see at what price it sells now. The vendor will have to take a hit - how much will have to wait and watch.


Yes Winston and so

Have you broken the duopoly that keeps building material prices so high?
Have you opened up cheap land to reduce housing prices?
Have you made building and consenting builds easier?
Have you inspired businesses to invest in technology and other means of increasing productivity?
Have you got those unemployed you were so keen about to start work - planting trees maybe ?
Have you focused on increasing productivity not simply pandering to the Unions on just wages?
Have you made changes to the taxation structure to encourage businesses to more R and D ?

Or have you been on holiday for 8 months waiting to sue yourself ...

manufacturing sector, RMA, etc

lol, true

None of the above will happen ... This lot were never serious about what they promised and they know too well that the brick wall they are facing is solid and too high to be broken by pulling numbers out of thin air and contradictory policies.

I think Winnie confirmed today that this CoLs is clueless and will not last to see the light of the second term , he won't be there anyway so he doesn't care less about dishing out some extra BS to fool the remainder of their naive and blind followers.

Thankfully, voters are not stupid, they gave this bragging noisy Lot a chance and the benefit of the doubt --- the noobs blew it bigtime and disappointed on all fronts.

Expect more of this kind of useless mind numbing announcements and revelations for the rest of their term - maybe they are trying to avoid an early election?

Replace this lot with whom? The last lot who are almost entirely responsible for the current mess and who will instantly double down and continue it from where they left off?

The sum assured for my house is more than I paid for it in 2010. This means is land was free I would still need to pay more to get the same sized house in the same location. The times in history where house prices have been considered cheap are when there are other undesirable external factors at play (think GFC) or high interest rates. This causes nothing to be built and those that have to sell to sell. A relatively few lucky people get a bargain. Without addressing the real issues (some of which you refer to above) it is all just moving deck chairs. For New Zealanders as a whole to be better off, two things need to happen. 1) Labour productivity needs to improve and 2) workers need to get a share of the improvement by getting higher wages. This will mean that wages will grow but inflation won't as the labour component of goods and services will be reduced.

Ha, almost time for an adult conversation with the next generation.

Winston has been a career politician.
Really what has he actually achieved?
Gold Card and a bit of smite stirring.
We will get the same over the next few weeks but nothing of any substance, just like this COL.

If the government wants to see a significant increase in incomes there will have to be a corresponding increase in per capita output.

Winston, I am not naive either. Just a simplistic ridiculous populist comment trying to endear yourself to the people during your brief tenure as Prime Minister.
It is not simply just about house price but also affordability.
I have often quoted that my first house house was four times my salary and today that same house today is 11 times for the same equivalent position and salary.
However, it is naive just to talk about house price. In my day mortgages were 9% were as currently they are less than 4.5%. Low mortgage interest rates are probably the single biggest driver in house price inflation over the past six years or so and increasing mortgage rates will see house prices to income at least stabilize or drop in the future.
I have no question that the market will see house prices return to affordability and rental yield levels with or without Winston in government.
Read Winston's comments as simply campaigning for another term for New Zealand First holding power.

may be for Tokoroa or Pataruru but for Auckland, Wellington, he's drimming..

Winston has forgotten about Chinese Capital Flight it seems:

The People’s Bank cut the reserve requirement ratio (RRR) for banks by 50 basis points to 15.5pc over the weekend, injecting over $100bn of liquidity into the financial system.

Nomura said it expects a blast of easing measures over coming months. These include a further 100 point cut in the RRR, higher commercial bank quotas, and a fiscal boost for local governments.

The hawkish US policy is pushing up the US dollar. This creates a toxic dilemma for the Chinese. If they loosen policy too much to shore up their economy they risk a rapid slide in the yuan, unsettling Chinese investors and triggering capital outflows.

Of course none of that will find its way to Auckland. Honest.


NZ First will be NZ Last come the next election. Winston is all talk and no action.

Dear Winnie...
For Christmas I want you to turn down the immigration tap. Open up the building standards to modern methods and overseas standards and kill off BRANZ... leading to cheaper consents and materials. Open up land by reforming the RMA. Tax unused land. Hold the construction industry fully liable for their mistakes.

This country is infested with do-nothing, box-ticking thugs. Council consultants on $150/hr doing my building consent. Banks outsourcing their core business to expensive valuers that provide reports a 12 year old could make from a few hours on GoogleMaps / Inconclusive soil reports that need to be re-done come construction time. BRANZ people that approve shitty materials like aluminium window frames. Lawyers taking the most part of $2k to swap a few names on a land title. So many of these parasites could be eliminated during a new build.

Is there any party that doesn't support this kind of box ticking economy? Maybe Act, but no thanks I don't want to vote for a party that campaigns in foreign languages.

Just to clarify - he is talking about first home buyers here (if you watch the video). Not sure which household income levels he has in mind for first home buyers. Perhaps he wants first home buyers at 35 years of age (with a 30 year mortgage, means the mortgage is paid off by retirement of 65)

There are two variables in the calculation to get to a house price to income ratio of 5.0x

1) household income growth - historically this has been 3.0% per annum
2) house price changes - dependent upon the market determination

Looking at Auckland house prices - using a 3% per annum household income growth and 0% per annum house price change (i.e unchanged), then it would take 19-20 years for the median house in Auckland to reach the house price to income ratio to reach 5.0x.

Is the absence of capital gains economically worthwhile for a property investor in Auckland currently on negative gearing?

Ignoring non financial considerations, is the absence of capital gains economically worthwhile for a first home buyer at current price levels in Auckland? The only way they are building equity is via their own principal payments on their P&I mortgage payments to reduce the mortgage - and they are paying the costs of financing when purchasing, as well as additional ownership costs such as rates, insurance and maintenance. If a first home buyer put the 20% deposit into a time deposit, they could earn 3.5% per annum as interest, rather than pay 4.2-4.7% per annum in interest cost when buying a house.

Blah blah blah ................ he knows it cannot be done when the cost of construction of a 70m2 tiny bach is $2,500 per square metre PLUS the land ($450k in Auckland ) ............... he would need to bring DOWN the wage rate and bring DOWN materials prices by 50% .

He is either a conman or is delusional saying he can do this

Both to your last question!

You think too big. They won't be 70m2 they will be 50m2. They already have issues with Kiwibuild houses falling below the minimum size for a standard mortgage.

Hil-larious reading all the bellyaching from those who voted for Winston, so sure he would go with Billy Boy.

where's that magic money tree Winston?

Tomorrow he will announce a fully covered racing stadium to be built in pukekohe and the city's homeless can live inside it between racemeets!

and eat the losers

Winston may "want house prices to be no more than 5 x income" but the market doesn't care, it will do what it will do.
BTW, most place in NZ, excluding Auckland and Qeenstown have a ratio of house prices less than 5 x income

The howling from the vested interests in this thread is music to my ears.

Up until to late 1980's, household medium multiple was 3x income, And the household income use to be just one earner, not two as is common today.

There is a hundred and one permutations on how we need to get there, but involves house prices dropping, wages rising, and putting people into smaller and smaller apartments.

How this might play out is on a knife edge, because there is much that is outside the 'control' of rational behaviour, more so on how prices could sudden drop and less so than on the deliberate political decision to encourage non productive property wealth creation.

It's almost Trumpist in the condemnation and deliberate misinterpretation of what Winston has said and what needs to happen with house prices.

Parallel to this happening is the increasing demand for incomes to increase or strike action. These increases are needed to make up for the rampant increase in house prices that have completely decoupled from what it costs to build them.

People wouldn't be needing wage increases if houses were at lower medium income multiples.

Winston is just stating the obvious. Just as there has been some pain to a certain section of society with the unwarranted increase in house prices, there will be some pain on the way down, until we achieve balance.